CoPS/IMPACT Working Paper Number G-257

Title: The Labour Module in a dynamic, regional CGE model

Authors: Glyn Wittwer and Janine Dixon


The NSW Department of Industry commissioned CGE model development in order to enhance regional labour market analysis. The Centre of Policy Studies has developed VUEF (Victoria University Employment Forecasting), a dynamic model used in labour market forecasting. VUEF is a national dynamic model. It includes regional detail, but this is limited to a top-down module in which regions do not have separate labour markets and production functions. Rather, it relies on exogenous regional shares to distribute national results to each region. Dynamic TERM (The Enormous Regional Model), with multi-regional bottom-up representation, has been used for policy analysis at the regional level at the Centre of Policy Studies since 2003. Until now, it has not been used to examine occupational or skills composition in the labour market. We have adapted the recently developed VUEF labour market module for use in dynamic TERM. This paper elaborates on the regional labour market module, with minimal details of the linkages with the core TERM model. The labour market module has been developed as a standalone model for training purposes. In practice, it is likely that the fully dynamic TERM model with the labour market module will be used for analysis. This paper also includes some guidance concerning the use of RunDynam.

JEL classification: R13, R15, R23, P25, P48

Keywords: skills shortages, occupational forecasting, regional modelling, RunDynam

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